The $1 Trillion Federal IT Challenge

The CEOs of IBM, Dell, and other tech companies say the U.S. government can reap huge savings from IT-driven initiatives, but their ambitious plan has virtually no chance of success.

The CEOs of six powerful technology companies took their brash idea for improving government efficiency to the White House on Jan. 31, laying out an eye-popping proposal for saving the feds $1 trillion over the next 10 years. Their proposal demands attention both for its incredible scope -- it’s 10 times the size of the Defense Department’s own austerity plan -- and audacious simplicity. But will the plan work?

Not a chance.

To hear IBM chief Sam Palmisano tell it, the tech-driven initiatives the CEOs propose -- IT consolidation, shared services, energy conservation, and more -- are eminently doable. “This isn’t IBM working on Apollo 13 or the space shuttle,” Palmisano said during a presentation at the Center for Strategic and International Studies, one day after the CEOs met with Obama and his cabinet.

Palmisano and Michael Dell first floated their proposal last October, in a column on Politico.com, which was followed by a white paper titled “One Trillion Reasons: How Commercial Best Practices to Maximize Productivity Can Save Taxpayer Money and Enhance Government Services.” That paper, by the Technology CEO Council (Palmisano and Dell are members), identifies potential savings in seven areas: up to $200 billion through data center and other forms of IT consolidation, another $200 billion by applying advanced analytics, and so on. The mother lode: $500 billion in savings to be extracted by “streamlining” federal supply chains.

It’s easy for the public to get excited by such a grandiose plan, but a dose of reality is needed. For one thing, the business cases behind the plan are flimsy. The authors, for example, say the U.K. government cut $4.8 billion from its annual IT budget, a 20% savings, by adopting cloud computing, but they provide no details on how it did so or how the U.S. could follow suit. There’s no mention of how many servers were decommissioned in the process, how many data centers were closed, which types of cloud services were implemented, or how any of that work translated into lower costs.

Of course, there’s also a strong undercurrent of self-interest in the CEOs’ vision of tech-enabled “smarter government.” Their strategy happens to mesh nicely with the products and services their companies sell. Advanced analytics? IBM’s a market leader. Data center consolidation? Dell sells servers and storage. Reduced energy use? EMC and Intel are experts.

Don’t get me wrong -- I’m sold on the benefits of investing in new technologies in pursuit of better/faster/cheaper government processes and services. The tech CEOs are right that Uncle Sam can and must do better in all of the areas they’ve identified. Virtually everyone, including the CIOs and CTOs on the front lines of these efforts, would agree on that.

But the massive challenge certainly isn’t as easy as the tech CEOs suggest, and the savings won’t be nearly as great. Palmisano, in his presentation at the Center for Strategic and International Studies, challenged the federal government to reduce the number of data centers it operates from 2,094 to 100, and he said that consolidation should entail “months of work, not years of work.” On what planet?

From that perspective, the Office of Management and Budget’s recently announced plan to eliminate 800 data centers over the next five years -- an aggressive goal -- is too little, too late. It’s almost as if the tech CEOs are criticizing the federal government’s IT leaders for being underachievers. Palmisano indicated as much in his recap of the Obama cabinet meeting, which was attended by federal CTO Aneesh Chopra. “He got a long list of to-dos,” Palmisano said. “It was pushed a little bit on why he wasn’t moving faster.”

Aside from the fact that Chopra isn’t responsible for federal IT implementation -- federal CIO Vivek Kundra is -- I sure hope it wasn’t the tech CEOs who were wagging an index finger at Chopra. Would they take that tone in a meeting with the CIOs of FedEx, JP Morgan Chase, or other big customers in front of their CEOs?

Kundra will be the first to acknowledge the need to accelerate the transformation of federal IT. His 25-point IT reform plan, introduced in December, has six-, 12-, and 18-month deliverables and calls for adoption of “light technologies” that can be deployed rapidly. The Open Government Directive had 45-, 60-, and 90-day deadlines. Kundra is moving a lot faster than his federal IT predecessors to effect real change.

Here’s a thought: If Palmisano and Dell really want to hash this out with the top IT decision makers in government, do it at InformationWeek’s Government IT Leadership Forum on May 5 in Washington. We invite them to take their argument directly to an audience of federal CIOs -- and hear what they have to say in response.

Federal IT leaders are already aggressively pursuing many of the objectives laid out by the Technology CEO Council. What OMB hasn’t done but must do is conduct its own rigorous cost-benefit analysis of where federal IT spending will lead to broader cost savings, not just improved efficiencies and services, with an eye on reducing the federal deficit.

No federal IT overhaul or OMB number crunching will approach $1 trillion in IT-related savings. But $50 billion here, $100 billion there -- pretty soon you’re talking about real payback.

Federal agencies must eliminate 800 data centers over the next five years. Find how they plan to do it in the new all-digital issue of InformationWeek Government. Download it now (registration required).

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